Coalition Unveils 'Ugly' Legislation List

Trade associations, e-merchants say these proposed laws are unnecessary.

by staff writer
- Mar 09, 2011

A coalition of trade associations, online consumers and e-commerce sites announced its 2011 list of "ugly" legislative bills today, adding that these bills are "bad," "confusing" and pose dangers to e-commerce.

The NetChoice's Internet Advocates' Watchlist of Ugly Laws—iAWFUL for short—includes a bill that would reduce the use of tracking data often used for marketing purposes, a bill that would prohibit teens from posting certain contact information on social-networking sites, two bills dealing with the collection of online sales tax, and six other bills the coalition says "threaten to undermine the freedom and openness that lie at the core of the Internet's global appeal."

NetChoice, which is made up of AOL, the American Vintners Association, the Association for Competitive Technology, eBay, the Electronic Retailing Association, Expedia, IAC, Internet Alliance, NewsCorp, Oracle,, VeriSign, Yahoo and The Wine Institute, announced the 2011 list today. The iAWFUL list was first introduced in 2009.

"Our 2011 iAWFUL list catalogues the disturbing willingness of legislators to micromanage how consumers and businesses communicate," notes Steve DelBianco, executive director of the coalition. "The continued evolution of free online services is imperiled by state and federal legislation tripping over themselves to jump on the privacy bandwagon."

'Unjustified restriction'

The Do Not Track Me Online Act tops the coalition's list, putting an "unjustified restriction on targeted advertising," coalition officials say. The bill would require that the Federal Trade Commission develop and enforce global opt-out preferences for Internet users so these users can decide what online behaviors they want tracked.

Lawmakers say this bill protects users' privacy, but the coalition says it could hinder businesses by causing a drop in targeted marketing and a potential drop in ad revenue for sites.

"In the Internet's current form, companies track and analyze consumers' use of the Internet in order to provide ads that are targeted to user interests," the coalition adds. "Targeted ads provide Web sites with more revenue than non-targeted ads because the targeting significantly improves the effectiveness of advertising." Limiting tracking could be bad for businesses, it notes.

Two years ago Rhode Island passed its advertising nexus law [and] saw zero new revenue

California's Social Networking Privacy and Tennessee's Relative to the Offense of Harassment acts, which would prohibit minors from displaying their phone numbers or addresses on social networking sites, are more unnecessary bills, the coalition notes. These came in at No. 2 on the list.

The coalition says these bills "micromanage" social networking sites and may give parents a false sense of security, could cause teens to lie about their age so they can post this information, and doesn't encourage site owners to offer age-appropriate material. However, states say this would protect minors' privacy.

Sales tax under fire

The coalition also called out two bills that would make running advertisements on a site the equivalent to having sales agents in that state. Eight states are pursuing this type of legislation. The coalition says these states simply want "to force out-of-state advertisers to collect" sales taxes on residents. Currently online sellers are supposed to collect sales tax from residents living in the states where companies have a physical presence. However, few do.

"Two years ago Rhode Island passed its advertising nexus law, saw zero new revenue and heard plans of a 500-employee online marketer leaving the state," NetChoice notes. "Now, Rhode Island seeks to repeal the law."

These bills, together, came in as the third "ugliest" law. Other tax legislation—what the coalition is calling the "Remote Purchaser Reporting Mandate"—came in as No. 9 on the list. This includes efforts by Hawaiian and Californian legislators to require out-of-state companies to report online sales made by in-state residents so states could collect sales tax on these transactions.

For a complete list of the laws that made it onto the iAWFUL list, visit

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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